FM's reform push resisted from within

Finance minister P Chidambaram’s grand plan to redefine how the Centre spends its funds through state governments is facing stiff opposition from within, pushing the Planning Commission to seek the cabinet’s views on the proposal.

The Centre disburses billions of rupees to states for achieving national developmental goals, but its effective use remains an area of concern. Though the Planning Commission had suggested reforms, Chidambaram — in a letter to Prime Minister Manmohan Singh — sought for more.

The finance minister wants the administration of over 100 central schemes with annual outlay of less than Rs 300 crore to be transferred to the state governments, so the Centre can concentrate on 17 big-ticket flagship schemes. He also said that no new scheme in the 12th Five Year Plan (2012-17) of less than Rs 500 crore should be permitted.

However, the plan panel estimates that his proposal would leave 17 central departments with no central scheme to administer, raising questions on the future of the bureaucracy linked with these schemes.

If the schemes are transferred, many bureaucratic positions in these ministries would have to be dissolved as the central government would be implementing only 73 programmes.

“The implementation of this recommendation will face operational difficulties,” the plan panel had said in a note circulated for the consideration of the Union cabinet.

Chidambaram had also proposed a new norm of minimum 25% share in funding for general category states, and 10% for special category states, to utilise central funds.

The proposal is contentious because the Centre, on an average, shared 80% of the funds for flagship schemes, worth Rs 6,60,000 crore, in the 11th Plan (2007-12). In the case of Right To Education, the government had agreed to pay 90% of the funding requirements.

"Any change will be resisted by the state governments and even the ministries, whose budgets would fall," a senior

plan panel official said, adding that the cabinet has been asked for its view.